Cook Company estimates that 355,300 direct labor hours will be worked during the
ID: 2479599 • Letter: C
Question
Cook Company estimates that 355,300 direct labor hours will be worked during the coming year, 2014, in the Packaging Department. On this basis, the following budgeted manufacturing overhead cost data are computed for the year. It is estimated that direct labor hours worked each month will range from 25,400 to 34,100 hours. During October, 25,400 direct labor hours were worked and the following overhead costs were incurred. Fixed overhead costs; supervision $7,280, depreciation $5,000, insurance $2,697, rent $1,510, and property taxes $1,710. Variable overhead costs; indirect labor $10,575, indirect materials, $5,468, repairs $4,778, utilities $4,733, and lubricants $2,034. Prepare a monthly manufacturing overhead flexible budget for each increment of 2,900 direct labor hours over the relevant range for the year ending December 31, 2014. (List variable costs before fixed costs.)Explanation / Answer
Units Units Units Units Particulars 25400 28300 31200 34100 Variable Exp: (Exp*Direct labor hrs/25400) Inirect labor 10575 11782.38 12989.76 14197.15 Indirect Material 5468 6092.30 6716.60 7340.90 Repairrs 4778 5323.52 5869.04 6414.56 Utilities 4733 5273.38 5813.76 6354.15 Lubricants 2034 2266.23 2498.46 2730.69 Total Variable exp 27588 30737.81 33887.62 37037.43 Fixed Exp: Supervision 7280 7280 7280 7280 Depreciation 5000 5000 5000 5000 Insurance 2697 2697 2697 2697 Rent 1510 1510 1510 1510 Property Tax 1710 1710 1710 1710 Total Fixed exp 18197 18197 18197 18197 Total Exp (Variable +Fixed Exp) 45785 48934.81 52084.62 55234.43